A Cost Function with One Independent Variable Is Estimated with Least

question 50

Multiple Choice

A cost function with one independent variable is estimated with least squares regression.The coefficient of determination for the equation is 0.50.This statistic indicates that ________.

• A) the independent variable does not explain changes in the dependent variable very well
• B) the dependent variable does not explain changes in the independent variable very well
• C) the cost estimates are correct 50 percent of the time
• D) the cost estimates are not correct 50 percent of the time

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Definitions:

Production Possibilities

A curve or frontier that illustrates the maximum feasible amounts of two commodities that can be produced with available resources and technology.

Competitive Equilibrium

A state in a market where supply equals demand, and no economic agent has the incentive to change their behavior, leading to an efficient allocation of resources.

Consumption Bundles

A combination of various goods and services that an individual consumes to derive satisfaction or utility.

Income

The amount of money received over a period of time, typically as payment for work, goods, or investments.